Bonds Fall Again Following Weak Manufacturing Data

By Michael Aneiro

Maybe it really is just the weather, but this steady stream of weak economic data shows no signs of abating. Today it’s the Philadelphia Fed’s manufacturing index, which unexpectedly dropped to -6.3 this month from 9.4 in January, the first negative reading in nine months. The weather was again the scapegoat, as the Philly Fed noted:

The survey’s broadest indicators for general activity, new orders, and shipments suggest moderate declines this month, but comments suggested that much of the weakness was attributable to the severe winter weather that affected the region during the survey period. Firms continued to add to their payrolls, but average work hours fell. Despite the weakness in current indicators, many of the survey’s indicators of future activity improved this month, reflecting optimism about continued growth over the next six months.

That optimism that things will get better once the weather warms up (coupled with some actual warming of the weather today) helps explain why stocks are up and bonds are down, with the ten-year note down 8/32 in price, per Tradeweb data, lifting its yield to 2.763%.